Bloomberg News

New York Says Banks Investigated Over Sandy Repayments

March 06, 2013

New York State’s banking regulator is investigating whether lenders improperly demanded repayment from homeowners who were allowed to skip mortgage payments in the aftermath of superstorm Sandy.

The Department of Financial Services is asking lenders to allow more time for homeowners to make back payments and reviewing whether the firms kept a promise not to start foreclosure proceedings in certain cases, Governor Andrew M. Cuomo said today in a statement. He didn’t name the banks.

“Major banks” and loan servicers agreed last year to waive payments for three to six months for borrowers affected by the storm, and said they wouldn’t demand balloon payments later, according to the statement. Some homeowners have since told the regulator that they are being asked for full lump-sum payments.

“We are investigating to determine if the complaints we have received are isolated incidents or part of a disturbing trend,” Benjamin Lawsky, superintendent of financial services, said in the statement. “Banks can’t just say they will help homeowners hurt by Sandy. They must deliver.”

Sandy struck the U.S. East Coast in October, killing more than 100 people and damaging homes, cars and businesses. It caused as much as $25 billion in insured losses, according to modeler Risk Management Solutions Inc.

To contact the reporter on this story: Elizabeth Dexheimer in New York at edexheimer@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net


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